Sunday, May 29, 2022

Letshego wary of legislative challenges in Africa

Letshego, the Botswana domiciled micro financier, said on Tuesday it is in the process of introducing minorities in Zambia as it rules out opening shop in Zimbabwe in the near future because of anti investment legislations.

The Botswana Stock Exchange (BSE) listed outfit likes Zimbabwe but the market is not on its radar now. Its plans are to hoist Botswana flag in Lesotho and Nigeria.

“Zimbabwe is our neighbor,” Colm Patterson, Letshego Holdings Chief Financial Officer, told analysts and journalists. “But there are obviously challenges like the Indiginisation Legislation”.

The anti investment law, which is loathed by anti Robert Mugabe camp, is targeted at bigger UK companies in banking and mining sectors like Barclays and has caused more harm than good to the Zimbabwean economy.

ABC Holdings, which is also domiciled under IFSC, is one of the few pan African financial services companies operating in that market.

Zambia, on the other hand, is another market that is proving to be problematic for Botswana companies as evidenced by the recent case of Bifm and its Lusaka subsidiary.

Bifm, which is the asset management division of BSE quoted BIHL, was forced to cede a certain percentage of its shareholding to Zambians although the subsidiary was set up before the law came into place.

The new legislation forced Bifm to reduce its stake in African Life Financial Service of Zambia from 71 percent to 49 percent.

In a bid to avert similar problems with the law, Letshego said it will introduce Zambians as shareholders in the near future.

“What we are planning to do is to bring minorities in Zambia,” said Patterson. He added that Letshego is looking at expanding to new markets, like Lesotho and Nigeria.

However, there are no plans to activate dormant accounts in Uganda and Malawi at the moment.

Nigeria will look attractive to shareholders because of the population of close to 200 million people, which will translate into a larger workforce compared to other markets it operates in currently.

Letshego pays itself by taking the money from the source unlike commercial banks that deduct the money from consumers leading to higher default rates.

“It (Nigeria) is a huge market with a population of between 170-200 million. There are lots of stories, but it is one area we should explore,” said a bullish Patterson.

“Lesotho is the most imminent market we want to go into. But we are not planning to go to Malawi and Ghana,” he added.

Lesotho’s population is around 2 million people, which is almost the same size as that of Botswana.

The move to have new operations will ease pressure from Botswana, which contributes 71 percent of the group’s profits. Although it has a small population, the formally employed are more than 250, 000 people.

Letshego currently has operations in Botswana, Swaziland, Tanzania, Uganda, Zambia, Namibia and Mozambique. Its customer base is 140, 000 across these markets, which are very competitive and turn around time and is key to survival.

Despite these markets being challenging for the group, Patterson said he is bullish that profits will go up 40 percent for the full year, which will be in line with half year.

He also hinted at the rollout of new products which will be in line with Letshego’s retail focus. He ruled out the company going to corporate or merchant space.

The other challenge for the micro lenders going forward will be the new fee and charges as stipulated by regulators. NBIFRA in Botswana for example wants to see the rip off by lenders kept in check as is the case in other jurisdictions in Africa’s. The regulator has proposed uniform charges.

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